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Monday, March 21, 2011

Want enduring health reform? Invest in education

From the San Fransico Chronicle

by William H. Dow

Our nation is one year into the latest effort at combatting the national embarrassment of the high and growing proportion of people without health insurance.

If the reforms called for by the Patient Protection and Affordable Care Act of 2010 are fully implemented, the number of uninsured California residents will drop by two-thirds by 2016.

This striking accomplishment will be achieved by extending insurance subsidies to fully one-third of the population. But with health costs growing faster than incomes, a continually increasing portion of the population will require ever-more expensive subsidies.

So how can our society afford to sustain this hard-fought reduction in the number of uninsured? The most enduring solution lies beyond our ongoing health reform debates: investing in improved education for disadvantaged children.

The main reason that people are uninsured is because they cannot afford to pay insurance premiums. The average health insurance plan purchased through an employer now costs a family almost $14,000 per year, or more than 25 percent of an average household's income.

This is up from about 15 percent of average income a decade ago, so it is not surprising that the proportion of the population uninsured has also increased by almost 20 percent over the past 10 years.

Last year's federal health care reform will dramatically reduce the number of uninsured over the coming decade - but this latest reform is not a permanent fix.

If premiums continue to rise rapidly, then more and more low-income people will need government subsidies in order to avoid becoming uninsured, thus last year's debates over whether we can afford reform will only intensify in the future.

What could reverse this growing crisis with insurance affordability? Slowing the rate of health care spending increases would seem essential - the problem is that there are no proven silver bullets for doing so.

Even the most promising provisions of last year's federal reform are likely to have only modest effects on reducing health care spending growth. Many European countries have achieved lower spending through the use of government price controls, but such an approach is not politically feasible in the United States nor is it clear that it would work well here.

Instead, a more promising approach to combatting the insurance affordability crisis will be to enhance the earning power of lower-income Americans so fewer will need subsidies. To do so will inevitably require expanded investment in education for disadvantaged children. Among California adults under the age of 65 who are now uninsured or on Medi-Cal (subsidized government insurance), two-thirds didn't go to college.

Health care reform will be an ongoing effort for generations to come, and like any good prevention effort, expanded investment in education will require a forward-looking, long-term perspective. Indeed, education is the ultimate prevention tool: Two-thirds of California high school dropouts under the age of 65 are now uninsured or on Medi-Cal, compared with 12 percent of four-year college graduates.

Furthermore, better educated adults are less likely to smoke or be overweight, resulting in much lower rates of costly chronic health conditions.

Improving education outcomes for disadvantaged kids will not be cheap or easy. But the fact that one-fifth of California students drop out of high school is a tragedy for the next generation. We need to recognize that failing to invest appropriately in education today is penny-wise and pound-foolish: We are exacerbating problems for our children's generation, including creating an even bigger health care mess for them to finance.

Our health care problems would be much less acute if a generation ago we had helped more of our disadvantaged youth finish school. As California works through the current budget crisis, let's remember the long-term consequences of failing to educate our kids. Paradoxically, the most enduring health reform is education reform.

William H. Dow is a professor of health economics at UC Berkeley. Contact The Chronicle at chronicle/submissions/#1.

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